Many of my clients who own a condominium, or live in a neighborhood that is subject to homeowners association dues, are surprised to learn that after they file bankruptcy they still have an obligation to pay the monthly condominium or homeowners association (“HOA”) fees. While filing bankruptcy will discharge all the condominium or HOA fees or dues that had accrued before the case was filed, it will not discharge the obligation that becomes due after the case is filed. This is due to an exception in Bankruptcy Code Section 523(a)(16), which provides that a discharge will not include fees or assessments that become due and payable after the case is filed.
In other words, the debtor will continue to be liable for these fees after the filing of the bankruptcy case until the debtor no longer has any legal interest in the property. That means that even if the debtor indicates on his or her Statement of Intent that he or she plans on surrendering the property, he or she is still liable for these fees after the case is filed until the property is no longer titled in the debtor’s name, i.e., it is sold to another person or entity. Unfortunately, even when the debtor gets a notice that the property is scheduled to be sold at a foreclosure sale on a certain date and the debtor waits to file the case until after that date to avoid having to pay future condominium or HOA fees, there is no guaranty that the sale will be ratified by the Circuit Court. Until the sale is ratified and title changes hands, the debtor is still liable for the post-petition condominium and HOA fees.
Laura Margulies is the principal of Laura Margulies & Associates, LLC. Our firm is dedicated to helping consumers file bankruptcy cases and getting the fresh start they deserve. To learn more information about our firm please visit our web site, www.law-margulies.com.